Those Expecting Low Inflation Are in for a Surprise – Ep. 314

Those Expecting Low Inflation Are in for a Surprise – Ep. 314

Market Ignoring Economic Realities
All three of three of the U.S. stock market indexes are ringing in the New Year with new record highs. The market was up on the first trading day of the year; up again today. NASDAQ composite is the star, 7065 today up another .84% - a new record high. The same thing with the S&P and the Dow. The Dow is now almost at 25,000; it closed at 24,922. Of course, everybody is ignoring, though, the economic reality.
What Do Oil Price Increases Imply for the Economy?
Look at the price of oil, up again today - 61.77 is the close, up 1.40 - we were up yesterday. This is the highest oil has closed in over 2 years. If we get above 62.75 that would be the highest close since December of 2014. It was all between July and December of 2014 that oil prices collapsed from above $100/barrel to below $40. I think this year we have clear sailing to $80 - $100 oil this year. Nobody is talking about what this implies for the U.S economy. This is a gigantic tax hike for consumers. Doubling the price of oil over a 2-year period is going to have a major impact on the cost of everything.
Watch Commodities Prices
It's not just energy costs. Commodities in general are strong. Gold was up $15 on the first trading day of the year; we were down about $4-5 today, getting back some of the gains, so gold is off to a good start. Some of the gold stocks were very strong yesterday. Across the board, the resource sector is going up. In fact the ironic thing is that we got the release of the FOMC minutes today and as soon as the minutes came out, gold actually sold off, and clawed its way back to down a little bit on the day.
Fed Expectations of Low Inflation
If you look at those minutes, the only concerns that the FOMC minutes expressed about inflation was that it was still too low. They are worried that inflation expectations are still too low, that the public, or investors still don't expect enough inflation, which shows you how clueless the public is. If they don't think there is going to be inflation, they're wrong. Those expectations are totally wrong.
Hitting 2% Inflation Out of the Park
People are ignoring what is going on in the currency markets, the commodities markets, the bond markets. All of these markets are flashing inflation, according to the way you measure it: Consumer prices producer prices, they're all going to be going up, and the Fed, is still worried that they are not going to be going up fast enough, that they're not going to hit their 2% goal. They are going to hit that out of the park. They are going to be looking at 2% in the distant rear view mirror. Our Sponsors: * Check out Infinite Epigenetics: https://infiniteepigenetics.com/GOLD * Check out Justin Wine and use my code SCHIFF20 for a great deal: https://www.justinwine.com Privacy & Opt-Out: https://redcircle.com/privacy

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